Oil & Gas Prices - April 15

[dan_s]

Opening Prices:
> WTI is down 42c to $62.73/Bbl, and Brent is down 28c to $66.30/Bbl. < Profit taking after yesterday's big run.
> Natural gas is down 2.2c to $2.596/MMBtu.

AEGIS Notes
Oil

The market received supportive data reported by the EIA on Wednesday
The EIA reported a draw of (-) 5,890 MBbls for the week ending April 9, well above the estimate of a (-) 2,580 MBbls draw
Inventories for the U.S. are now at a surplus of 8.053 MMBbls to last year and a surplus of 10.79 MMBbls to the five-year average

Diplomats resumed talks in Vienna to try and revive the 2015 nuclear deal with Iran
An attack on an Iranian nuclear facility over the weekend stoked new tensions, as the country announced it would begin enriching weapons-grade uranium < IMO we are insane if we allow Iran to obtain "weapons-grade" uranium. Israel will not allow it to happen, so this is setting up the next big Middle East war.
Parties from Iran and six other world power, including the U.S., began talks on Thursday to try and get the U.S. to re-join the accord, assuming Iran complies with its enrichment commitments

Oil agencies lift 2021 demand forecast on vaccine optimism
The IEA, EIA, and OPEC all increased their 2021 demand forecast by 200 MBbl/d, 125 MBbl/d, and 175 MBbl/d, respectively
Both the EIA and OPEC announced that they expect demand to weaken slightly in 2Q2021, with the IEA forecasting the opposite. All three agencies do see demand growth in 2H2021

Natural Gas

Both lines of the Nord Stream 2 project are likely to be laid no later than June (Bloomberg)
“We hope very much that by the end of the summer all the construction and commissioning works” on the Nord Stream 2 pipeline will be completed and Germany will receive its first technical gas, Pavel Zavalny, head of Russian State Duma’s energy committee
Two pipelaying vessels are working on completing the pipeline
AEGIS notes that Nord Stream 2 will allow more Russian gas supply to reach Western Europe and change how much LNG is needed for import in the region

A survey from the Federal Reserve Bank of Kansas City showed that operators in the Rockies expect oil and gas prices to average from $62-$65/Bbl and $2.74-$2.92/MMBtu
Drilling activity in the Rockies increased moderately in the last quarter, and year-over-year activity in the region expanded for the first time since early 2019
Firms surveyed, on average, said they needed prices to be at $53/Bbl and $2.94/MMBtu for profitability
“A tremendous amount of uncertainty will exist on both the demand side and politically during the next 12 to 24 months,” said one respondent to the federal survey

[dan_s]

From Stifel Notes 4-15-2021:
Focus on the Oilfield Services Sector: "As the world starts to normalize, the confluence of rising oil demand, OPEC+ supply constraints, and upstream underinvestment have underpinned a strong rise in crude oil prices since mid-2020. Global upstream activity has also rebounded, including a sharp rise in U.S. drilling and completion activity thus far in 2021. Heading into 1Q21 results, we expect solid results and likely increased confidence in 2021-22 profitability, but this will likely be tempered by E&P commentary that material upward revisions to budgets are unlikely. Following the recent volatility in oil service names, we reiterate our belief that investors should focus on differentiated names - ChampionX, Cactus, and DMC Global remain favorites. On the large cap side, underperformance YTD makes Baker Hughes a compelling story, and we believe Schlumberger will benefit from a rebound in international activity."

[dan_s]

Closing Prices:
> WTI prompt month (MAY 21) was up $0.31 on the day, to settle at $63.46/Bbl.
> NG prompt month (MAY 21) was up $0.040 on the day, to settle at $2.658/MMBtu.

May21 and Jun21 propane futures closed at $31.34/bbl. < Good for our gassers.